Standard Chartered Bank Kenya (StanChart) and KCB Bank Kenya top the list of banks having loan exposure worth Sh78.2 billion in government entities as of end-June 2024.
The latest disclosures from the National Treasury show that Standard Chartered Bank has the highest exposure, lending Sh16.62 billion at the end of the financial year that ended in June, followed by the Bank of Korea with Sh14.61 billion.
The two lenders account for 39.9 percent of unsecured loans owed to state-owned enterprises. Other major lenders include Stanbic Bank Kenya, Absa Bank Kenya, NCBA, Cooperative Bank of Kenya and Equity Bank of Kenya.
The Treasury shows that Standard Chartered Bank ended the period with dollar-denominated loans worth Sh14.17 billion and Sh2.46 billion to Kenya Power and Kenya Pipeline, respectively.
Unsecured debt means they are not backed by the state, although the Treasury still faces exposure because when these entities default, the government has to move to bail them out due to their strategic importance to the economy.
Treasury data shows that 64 percent or Sh50.4 billion of the Sh78.2 billion loans are denominated in dollars, exposing these state companies to foreign exchange losses due to fluctuations in the local currency against the dollar.
KCB has outstanding loans with seven state companies, the largest of which is Sh7.53 billion to the Kenya National Oil Corporation (Nock) and Sh4.35 billion going to the National Grains and Production Board for the purchase of fertilisers.
The lender has three outstanding loans to the Jomo Kenyatta University of Agriculture and Technology (JKUAT), worth Sh2.3 billion.
This is in addition to Sh187.97 million and Sh173 million issued to the Agricultural Development Corporation and Kerio Valley Development Authority respectively.
Stanbic Bank, Absa and the French Development Agency (AFD) have outstanding loans to government companies worth Sh10.83 billion, Sh10.78 billion and Sh10.4 billion, completing the list of the top five lenders.
The Kenya Ports Authority has two loans in Stanbic, worth Sh8.24 billion while the same lender also issued Sh2.59 billion to Nock.
Absa lent KenGen worth Sh10.36 billion and Sh422 million to the University of Nairobi while the French Development Agency granted Nok two loans worth Sh10.4 billion.
Other banks with outstanding loans to government entities include NCBA (Sh6.63 billion), Cooperative Bank (Sh4.62 billion), Rand Merchant Bank (Sh2.27 billion), Equity Bank Kenya (Sh1 billion) and Trust Bank (Sh271 billion). 5 million) and UBA Kenya (Sh66.57 million).
NCBA has outstanding loans worth Sh6.5 billion to Kenya Power and Sh102.7 million issued to Kenya Post.
The major loans owed to the Co-operative Bank are to the Geothermal Energy Development Company (Sh1.87 billion), New Kenya Creamery Manufacturing Company (Sh1.58 billion) and Southern Nyanza Sugar Company (Sh649.7 million).
Rand Merchant Bank’s Sh2.26 billion loan is to Kenya Power Company, while Equity Bank Kenya’s Sh2. . To Kenya Power.
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